Macro Week in Review/Preview July 13, 2018

• Posted by Greg Harmon
• on July 13th, 2018

Last week’s review of the macro market indicators noted with the 4th of July behind, slow holiday trading had begun and it seemed to be good for equities so far. Elsewhere looked for Gold to bounce in its downtrend while Crude Oil might pause in its uptrend. The US Dollar Index was also pausing in its uptrend while US Treasuries were breaking out to the upside.

The Shanghai Composite continued to look better lower but may have a short term pause while Emerging Markets might be reversing to the upside after a several months long pullback. Volatility looked to continue to creep lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all looked good in the long term with the IWM the strongest in the short run, but the SPY and QQQ were reversing higher out of support.

The week played out with Gold losing the bounce and falling back while Crude Oil held up early then fell mid week and consolidated. The US Dollar found support and moved slightly higher while Treasuries were rocked Monday but recovered by Friday. The Shanghai Composite found its footing and drifted up while Emerging Markets made a small move higher.

Volatility held in a tight range in the low teens, keeping the bias higher for equities. The Equity Index ETF’s reacted in mixed fashion, with the QQQ rising to new all-time highs and the SPY to nearly 6 month highs. The IWM however stalled Monday and pulled back without making a new high. What does this mean for the coming week? Lets look at some charts.

Gold Daily, $GC_F

Gold Weekly, $GC_F

Gold had bounced off of a retest at the December lows as the week began. It tried to move higher Monday but could not hold up and then reversed. It continued lower the rest of the week finishing back at the December low. The daily chart shows the RSI cruising along at the oversold level but flat while the MACD is failing as it tries to cross up.

On the weekly chart this pullback is right at the flat 200 week SMA. The RSI on this timeframe is falling in the bearish zone with the MACD crossing to negative. There is support below at 1215 and 1200 then 1185 and 1145. Resistance above here comes at 1265 and 1278 then 1300 and 1315. Continued Downtrend.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil was consolidating gains at nearly 4 year highs as the week began. It continued to move sideways at the start of the week. But Wednesday saw a sharp pullback, settling at the 20 day SMA and rising trend support. Thursday it spiked down, reaching a 50% retracement of the last leg up, and then recovered and followed it up with a slight gain Friday. A Hammer reversal pattern confirmed. The daily chart has the RSI holding at the mid line with the MACD dropping.

The longer timeframe shows the drop off of the minor resistance at 75 from 2014. The RSI is dropping in the bullish zone with the MACD flat and positive. There is resistance at 71 and 72.80 then 75 and 83. Support lower comes at 69.50 and 66.50 followed by 65 and 62.50. Consolidation in the Uptrend.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index was pulling back from resistance and had touched the 50 day SMA as the week began. Monday saw a lower shadow move through that 50 day SMA and then recover and it was confirmed as a reversal Tuesday with a move higher. It continued higher until late Friday when it gave up its gains for the day. The daily chart shows the RSI continuing to roll lower in the bullish zone with the MACD trying to cross up.

On the weekly chart it is clear the motion is quite subdued. The RSI is holding in the bullish zone and moving sideways. The MACD is rising and positive. Just consolidation in the move higher. There is resistance at 95 and 96.50 then 97.40 and 98.30 before 99. Support lower comes at 94 and 93 the 92 and 91.40. Pause in Uptrend.

iShares Barclays 20+ Yr Treasury Bond Fund Daily, $TLT

iShares Barclays 20+ Yr Treasury Bond Fund Weekly, $TLT

US Treasury Bonds had pushed up over resistance to 5 month highs and over the 200 day SMA when the week opened. They immediately fell back under the 200 day SMA and found support. The rest of the week they worked back higher, finishing nearly unchanged. The daily chart shows the RSI strong in the bullish zone with the MACD level.

The weekly print has the price pushing the 50 week SMA and the Bollinger Bands® are opening to the upside. The RSI is rising toward the bullish zone and the MACD is about to cross to positive. There is resistance at 123.25 and 124.25 then 125.25 and 127. Support lower comes at 122 and 120.25 then 118.20 and 116.20. Uptrend Resumes.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite ended last week with a Hammer candle after a long pullback to 2½ year lows. It confirmed it as a reversal Monday with a strong move up and followed through Tuesday. But that was all it could muster. It fell back Wednesday and the recovered Thursday, touching the falling 20 day SMA for the first time since May, then pared back Friday. The daily chart shows the Possible bottoming pattern with the RSI rising and the MACD crossed up and rising.

On the weekly timeframe the RSI is also turning up off of an oversold condition while the MACD continues lower. There is support at 2800 and 2650 then 2450. Resistance above is now at 2900 and 2940 then 3000 and 3040. Possible Bottom Building.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets were building a short term bottom when the week began. Monday the gapped up over the 20 day SMA smelling of a reversal. they held there Tuesday but dropped back Wednesday. Thursday saw them move back over the 20 day SMA and they held there Friday. The daily chart shows the RSI poking at the mid line with the MACD rising. The Bollinger Bands® are starting to squeeze in.

The weekly chart shows the confirmation of a bounce off of the 100 week SMA. The RSI is trending lower still and at the edge of the bullish zone with the MACD falling and negative. The long term support/resistance zone is right overhead. There is resistance at 44 and 46 then 48 and 50. Support lower comes at 42.25 and 41 then 40 and 38.80. Possible Reversal Higher.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index was falling as the week began and continued lower Monday. Tuesday saw another move down but intraday recovery and bounce into Wednesday. But it fell back the rest of the week to end below the teens. All told it was just a 2.5 point range on the week. The RSI on the daily chart is back at support levels with the weekly RSI falling near support. Both the daily and weekly MACD are negative and falling. There is support at 11.50 and 10. Resistance higher is at 12.40 and 15.67 then 18 and 22. Continued Low Volatility.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY had moved up out of a bottoming consolidation at the end of last week. Monday saw that continue with a move higher. It followed on Tuesday before a small set back Wednesday. Thursday it pushed back higher to the June high and added a small gain Friday for the highest close since February 1st. This 278 to 280 area has stopped moves higher 3 times before. Now it is a 4th attempt to break through.

The daily chart shows the resistance and the RSI holding high in the bullish zone. The MACD is rising and positive and has a long way to run until it is at prior extremes. The Bollinger Bands® are quite flat, but might be starting to open on the upper side. A close over 280 would be a major bullish event.

On the weekly timeframe the SPY printed a second candle opening at the low and closing at the high. The RSI on this timeframe is pushing higher in the bullish zone with the MACD positive and moving higher. A higher high after a higher low, an uptrend. There is resistance at 280 and 283 then 286. Support lower comes at 279 and 277.50 followed by 274.50 and 272.50. Nascent Uptrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM was moving up toward its all-time high as the week began. Monday continued that move but then Tuesday and Wednesday set it lower to the 20 day SMA. It held there the rest of the week. The daily chart shows the stall at resistance and the RSI holding over the mid line in the bullish zone. The MACD is flat and positive, sitting at the signal line. The Bollinger Bands® are quite flat on this timeframe.

On the weekly chart it printed a small body candle at the highs, digestive. The RSI on this timeframe is holding high in the bullish zone with the MACD positive but flat. A pause may be in order. There is resistance above here at 170. Support lower comes at 166.25 and 164.25 then 162 and 160. Possible Pause in Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ was also moving toward its all-time high as the week started. And it also continued Monday and Tuesday before a set back Wednesday. But unlike the others the QQQ rocketed to a new all-time high Thursday. It followed that with a small gain Friday. The daily chart shows the move over resistance and the RSI rising in the bullish zone. The MACD is rising and positive and has a long way to run until it is at prior extremes. The Bollinger Bands® are opening on the upper side. This has room for more upside.

The weekly timeframe shows a second candle opening at the low and closing at the high. The RSI on this timeframe is pushing higher in the bullish zone with the MACD positive and moving higher. A higher high after a higher low, an uptrend. There is no resistance higher. Support lower comes at 178 and 176 then 174 ad 173. Uptrend Continues.

Heading into July options expiration week there has been a shift in short term leadership in the equity markets back to the QQQ from the IWM with the SPY continuing to improve. Elsewhere look for Gold to continue lower while Crude Oil consolidates in its uptrend. The US Dollar Index continues to pause in its uptrend while US Treasuries continue to move higher. The Shanghai Composite may be building a bottom after a long drop and Emerging Markets are showing signs of a possible reversal to the upside after their long drop.

Volatility looks to be back at extreme low levels and holding keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on the longer timeframe with the QQQ leading the charge. On the shorter timeframe signs of a pause are showing in the IWM while the SPY and QQQ are continuing higher. Use this information as you prepare for the coming week and trad’em well.

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